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<br /> CONTRACT YEAR and particularly in order to maintain safe, <br /> reliable, economical and efficient operation of the SYSTEM by <br /> LCRA, CITY will not unreasonably withhold its approval of any <br /> annual OPERATING BUDGET or CAPITAL BUDGET modifications <br /> proposed by LCRA. <br /> CITY shall have the right to evaluate the impact of any <br /> annual CAPITAL BUDGET modifications for renewals and <br /> replacements and major capital additions on CITY's retail rates <br /> and/or financing capabilities and any adverse impact thereto <br /> may control CITY's approval except to the extent the proposed <br /> modification is required to correct an unsafe or potentially <br /> unsafe condition on the SYSTEM. <br /> 2.6 CITY will establish rates, fees and charges, <br /> including applicable terms and conditions of service <br /> (hereinafter "SCHEDULE OF RATES") and regulations of electric <br /> service (hereinafter "RULES AND REGULATIONS"), for the various <br /> classes of CUSTOMERS served from the SYSTEM. "CUSTOMER" for <br /> purposes of this Agreement, shall mean all retail consumers of <br /> electric power and energy directly connected to the SYSTEM at <br /> the time of the purchase or which may be directly connected in <br /> the future to the SYSTEM after purchase of the SYSTEM by CITY <br /> from LCRA. From time to time thereafter, CITY may adopt, by <br /> -7- <br />